International trade and investment in Eastern Europe and the Soviet Union

How should one analyze the economic relations between advanced capitalist systems and other economic systems? So far the economists have mainly concentrated their efforts on studying the relations between developed capitalist countries (henceforth DCs) and the less developed countries (henceforth LDCs) of the world. There has not, however, been a significant effort in devising a systematic theory of economic relations between DCs and the socialist countries. I intend for my dissertation to be a contribution in that direction. It is concerned with investigating the role of international trade and investment in the countries of Eastern Europe. In the process of observing the economic relations of the DCs and LDCs, two major schools of thought have emerged: the dependency school and the diffusionist (mainstream neo-classical) school. The latter, in general, sees the positive aspects of the links between DCs and the poor countries. The dependency perspective, on the other hand, argues that the problems of the poor (peripheral) countries are, in fact, their economic relations with the DCs (center). The exploitation by the center draws off most of the surplus that otherwise might have been used in the process of industrialization of the poor countries. My dissertation begins by examining how these two schools of thought have been theoretically successful in incorporating yet another dimension of the economic relations between different economic systems--the relations between the DCs and the socialist countries. In addition, my dissertation will also focus on another approach which I will refer to as the Eastern European approach. In the final chapter I will try to empirically verify the validity of the theoretical investigations of these schools. My conclusion is that although all the approaches discussed in my dissertation make some contribution to understanding East-West economic relations, none are entirely successful in presenting an accurate picture of such economic relations